"Crafting a Vision at Daimler-Chrysler" Case Analysis

In reviewing this article it was observed that some employees were skeptical of the merger between Chrysler and Daimler-Benz. Daimler-Benz employees were proud of the elite image and were concerned about having that tarnished by another company. Chrysler employees voiced concerns about the addition of a foreign partner to one of America's auto manufacturers. Employees needed reassurance that this merger was going to be a success! In light of all the adversity both companies faced since announcing their plans to merge, how did they remain so steadfast in their commitment to pursuing this merger? What kept them believing this merger was a good deal that deserved a second look? To answer these questions I want to step back and discuss what I believe needs to be said to raise spirits. We all know that the auto industry is always in the midst of transformation. We are in a period of auto manufacturing which defies all limits and crosses all borders, in which everything works with everything else, everywhere, all the time. It's a world where solutions matter most, where size makes a difference, and where success will depend upon our ability to align ourselves to function in a seamless way to answer our customers' every need. Other companies are indeed driving fundamental changes in customer requirements. The simplest way to describe the shift I see is this: the pure product era is over. Of course, Chrysler and Daimler-Benz have always engineered great products and have been organized to engineer great products. And while great products will always be their foundation, they need to realize that great products are no longer going to be enough, because customers are looking for solutions to new challenges presented by a transformed technological world. If Daimler-Chrysler is going to lead in this next era of auto manufacturing, they've got to keep moving in that direction. So, they must begin to think about their own products through the prism of this new marketplace....

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The Daimler-Chrysler merger represent an example of poor partner selection when engaging in cross-border collaboration. Cultural and strategic differences between the two companies have significantly affected the outcome of the merger and should have been taken into consideration in the target choice phase. Strategic objectives of the two companies are opposite, with Daimler focusing on high-end, high-performance segment, and brand protection, and Chrysler focusing on more affordable and comfortable vehicles. Differences in organizational cultures, flexible and innovative on the Chrysler side, structured and bureaucratical on the Daimler side, have also played a significant role in the failure of the merger. Differences in executives pay, national regulations of governance structures and different degree of executives involvement, contributed to make the conflict even more harsh(see Appendix).
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Do you think the culture problems could have been largely avoided in this merger? How?
As in any merger, integration is the most difficult to implement and in this case culture problems were inevitable. You have two large corporations in two different countries working in different management system, environment, believe, and culture. In order for this merger to work, one has to deign to create synergy.
I think this merger happened to quickly. If Daimler did enough due diligence, they’ll see how bad Chrysler was. There were plenty of problems with Chrysler especially the infra structure of the company. To make thing worse, Daimler lied to them that this would be an equal merger, not a take over. As a result Chrysler top managements were gone, and replaced by the German management led by Deiter Zetsche. This had created the cultural problems. American was proud and national prides were high. To be taken over by the German did not assimilate well to the public and especially at Chrysler.
I think to mitigate cultural problem, Daimler should invested more time learning the American auto industry culture, and had some equal American partners as top executives. Both sides had to condescend for the benefit of the companies. At least we know they have one similarity, which is the...

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Executive Summary
Since 1990, we have seen a high wave of mergers. Many companies where merging in order to respond to their environment and there is a reason for this. Indeed, in a world of globalization where the key trend is to become bigger and bigger in order to survive, it is of the utmost importance to position your strategy and strategic stakes based on your other competitors and your environment.
According to that, as we have already studied some merger that were a success (AirfranceKLM) or a failure (DaimlerChrysler) and know what went well or wrong, we can apply what we have already learn on the Fiat Chryslercase that are at that time in an alliance and that will possibly merge in the next 2-3 years.
What we are going to study during this case are the factors that will push them to merge. It is important for this study to take in consideration some external factors (that will play on the decision to merge or not) as the survivor theory, the political influence, and that consolidation is unavoidable (see endgame theory) in a world of globalization.
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...6. Evaluate Dieter Zetsche's strategies and reorganization in 2006. Also, analyze DaimlerChrysler'sbrands in the world auto markets as of end 2006'
Economist put it rightly when it spoke about the merger of Daimler Benz and Chrysler,
‘Without Daimler, Chrysler would be in liquidation; and without Chrysler, Mercedes would be confined to a limited future of narrowing horizons, as rivals encroached on the luxury market.’
However, the highly spoken merger did not work as they expected.Their structures and mechanisms were quite different. German approach was following a hierarchical and organized mechanism and Chrysler being quite relaxed in their approach. So, their basics were quite strange to each other and that fact has been found to be a quite hindrance to reach their planned goal in the merging.
By the time Zetsche took became the CEO of DaimlerChrysler it was facing huge problems such as law suits accounting for billions from investors, recalling of Benz cars on quality issues, slowed down sales etc.First of all, Zetsche announced tough production redevelopment measures and the cutting of 8,500 jobs. The second wave of attack followed in February and targeted office workers. Every fifth administration employee and every third manager was going to lose their job. By the end of 2008, a total of 22,000 administrative jobs were supposed to be slated to go.
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